So you want to go solar because you heard it could save you money on your electricity bills? The great news is that going solar is also good for the environment. That makes the federal government pretty interested in helping homeowners go green with solar energy. Some states even offer their own benefits for going solar, from state tax incentives to net metering, to property tax exemptions and more.
If you’re curious about solar incentives and you’re a homeowner in the United States, you’ve come to the right place. We’re about to go over all the incredible incentives (and benefits) available for going solar, and which states offer them. Here’s what we’ll cover:
- Solar incentives by state
- What types of state solar incentives are out there
- Myth: What 11 states get free solar?
- Which states have net metering?
- Are state solar incentives going away?
1. What states have solar incentives?
In addition to the federal tax incentive, many states and Puerto Rico offer incentives for going solar as well. Each state has different incentives and requirements, so it’s best to search for incentives in your region, or speak to a qualified Solar Energy Specialist to fully understand every opportunity available to you.
Here is a list of states that have solar incentives. Even if your state isn’t listed here, you could still be eligible for the 30% Federal Solar Tax Credit. To fully understand what’s available to you, it’s a good idea to speak with a qualified solar energy specialist.
2. What type of state solar incentives are available?
State tax credits
State credits are similar to the Federal Solar Tax Credit, but the credit is instead applied to your state taxes. Most often homeowners would be able to apply this to their taxes the year after their solar panel system was installed. State tax credit amounts vary widely state to state.
Sales tax exemption
Some states offer an exemption on the purchase of your solar panel system equipment. This means you’d pay zero sales tax on your system and depending on the size of your system could add up to a pretty substantial discount. Some of the states that offer this are Texas, Florida, California and New Mexico.
Property tax exemption
This exemption means your property taxes will not increase when you have a solar panel system installed on your home. As this is considered a home upgrade, your property taxes could increase like any other home construction project. However, not in the states with this exemption.
Some of the states that offer this are Texas, Florida and Arizona.
Net metering
Net metering allows you to receive credits on your utility bills for sending your unused solar energy back to the grid. It’s a pretty important incentive for going solar. We’ll get into net metering in more depth further down this article.
State government rebates
State government rebates are when you can receive a rebate upfront during the year your solar panel system was installed. Most of these state rebates are available only for limited amounts and once the funds are used for a year, the state will stop offering them. A good idea is to get ahead of the crowd by researching rebates for your state and applying well before the deadline. Some allow you to only apply after your system has been installed, so it’s smart to plan this out ahead of time.
Solar Renewable Energy Credits (SREC)
Solar Renewable Energy Credits, or more commonly known as SRECS, are offered by some state governments. This incentive is a certificate of the benefits your solar system provides to the environment. It works like this:
One SREC is generated for every megawatt-hour (MWh), or 1,000 kilowatt hours (kWh) of solar electricity a solar panel system generates.
In the states where SRECS are in effect, utility companies will purchase SRECs under the state’s Renewable Energy Portfolio (RPS) standards, which require utilities to generate a portion of their energy from renewable sources. This standard is determined by the state governments and varies depending on your state.
The states that currently offer SRECs are: New Jersey, Massachusetts, Pennsylvania, Maryland, Washington D.C, Delaware, and Ohio. New Jersey and Massachusetts are not currently accepting new applications for this program.
Which 11 states get free solar panels?
There is a rumor that the federal government is giving away free solar panels in 11 states. Unfortunately, it’s just that – a rumor. While there are many solar incentives including the federal solar tax credit, state tax credits and net metering, there is no government program in the United States that provides free solar panel systems.
You may have seen ads for “free solar panels” on social media. These ads are usually for power purchase agreements (PPA). In this arrangement, a homeowner rents or leases a solar panel system rather than buying it with cash or financing the purchase with a loan. Learn more about leasing versus buying solar panels.
3. What states have net metering?
Net metering is an arrangement between you and your electricity company. It allows you to receive credit towards your utility bill when your solar energy system produces more power than your home consumes. It’s one of the great factors of solar energy, there’s so much energy to go around!
Here are the states that currently offer net metering:
Even though not every state has net metering, it’s changing quickly. For example, Mississippi is on its way to cleaner energy with new net metering rules as of January 2022. These new rules will expand their current net metering program, improve total compensation rates for solar customers, and prioritize solar adoption for low-to-moderate income (LMI) customers. Solar in Mississippi has been slowly growing the last couple of years, and with this plan the state is hoping to boost its solar growth even more.
Net Metering 3.0
California’s Net Metering program, known as NEM 3.0, applies to any solar energy system submitted for approval after April 15, 2023, in the territory of the state’s three investor-owned utilities, PG&E, SCE and SDG&E. The new policy recalibrated how homeowners are paid for the energy they send into the grid. The policy credits solar system owners at the “avoided cost” rate which is based on what the utility would pay commercial-scale generators.
Although the avoided cost rate means users are generally paid less for the electricity they send to the grid, the new payment structure is designed to encourage solar adopters to add a backup battery to their solar energy system. The state’s Self-Generation Inventive Program can help offset the cost of a backup battery if you meet certain conditions.
4. Are solar incentives going away?
Some states are fighting against certain solar incentives, such as net metering.
This doesn’t seem to make sense because 1) solar energy is good for the environment and 2) homeowners should have a choice in what type of energy they’re using; therefore they should get incentives for using solar energy.
However, the truth is that the more people use solar energy, the less reliance on other types of energy we’ll need. And that means less business for the big oil companies. Therefore, some states are running into roadblocks when it comes to powering their home with clean solar energy. Take California for example:
Benefit from solar incentives no matter where you live
As you can see, there are plenty of options when it comes to solar incentives. But don’t forget, the very best way of finding out exactly which incentives are available to you is to schedule some time with a trained professional in this area. Curious what your first solar consultation might look like? We wrote this blog to walk you through it. And when you’re ready to schedule, we’ll be ready and happy to guide you through the process.
